The realization that any bottom in housing is going to take even longer to reach into new homes is apparently sinking in at many of the nation's key new home builders, according to the latest survey from Wells Fargo & Co.(WFC) and the National Association of Home Builders.
An index of builder confidence fell for the third consecutive month, and came in below its previous record low of 18 in June to a new record low of 16 in July; each of three component indexes also hit record lows as well, the NAHB said in a press statement Wednesday. An index gauging current sales conditions declined one point to 16, while an index gauging sales expectations in the next months fell four points to 23, and an index gauging traffic of prospective buyers also receded four points, to 12.
The newly-minted lows had NAHB officials continuing to sound the horn for a housing aid package that, so far, remains stalled in Congress.
"The worsening housing slump and the near-meltdown in financial markets last week makes it even more urgent for Congress to complete action on the housing bill now, a move that will help stabilize and restore confidence in housing and the U.S. economy," said NAHB President Sandy Dunn.
The housing stimulus bill now being considered in Congress would, among numerous other provisions, provide a temporary tax credit of up to $8,000 for first-time home buyers. Home builders argue that the tax credit will help to stimulate sales and reduce the inventory of unsold homes on the market, but critics argue that the measure is merely a ploy to keep demand artificially higher than it would otherwise be.
"Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months," said NAHB Chief Economist David Seiders. The assessment is a stark about-face from earlier reports, in which Seiders said builders were reporting plenty of potential buyers and no actual buyers; now, apparently, even the potential buyers are bothering.
"Given the systematic deterioration of job markets, rising energy costs and sinking home values aggravated by the rising tide of foreclosures, many prospective buyers have simply returned to the sidelines until conditions improve," he said.
Scores over 50 on the Wells Fargo/NAHB index indicate that more builders view sales conditions as good than poor.
All but one region showed declines in builder confidence in July. The Midwest declined six points to 10, its lowest HMI score since the regional detail was introduced in December of 2004, while the West matched a record low set in January 2008 with its three-point decline to 13. The South posted a one-point decline to 20. The Northeast was the only region to post a gain in July's HMI, rising two points to 14 from the previous month's record low of 12.
For more information, visit http://www.nahb.org.